It is always EaSIer said than done Per-Erik Eriksson, Head of Microfinance Investments

Transcription

1 It is always EaSIer said than done Per-Erik Eriksson, Head of Microfinance Investments Technical workshop on the new EaSI guarantee Brussels on 21 April 2015

2 Old EPMF G:tee Basic product features Cover of debt financing to micro-borrowers (EU definition) Guarantee (Counter- ) of a portfolio of micro-loans (Delegation principle) Free of charge (but application of commitment fees) Availability Period (so far 2 3 years) Guarantee Rate (so far up to 75%) Guarantee Cap Rate (so far up to 20%) Ex-ante Recovery Rate Target Volume vs Actual Volume Loss cover = Defaulted Amount x (1 Ex-ante Recovery Rate) x Guarantee Rate Max loss cover = Target Volume x Guarantee Rate x Guarantee Cap Rate

3 New EaSI G:tee What features are new? Increased Guarantee Rate (from maximum 75% to 80%) Increased Cap Rate (from maximum 20% to 30%) 1 / ( Guarantee Rate x Cap Rate) subject to minimum leverage of 5.5 Borderline combinations for GR x CP (60.6% x 30.0% or 80% x 22.7%) Extended Availability Period (from 24/36 months to up to 60 months) Retroactive guarantee coverage (6 months) Guarantee coverage also for overdraft line of credits (revolving facilities) Regulatory capital relief (unconditional guarantee) Microloans up to 25 k (rather than below 25 k as under EPMF) More clarity as to state aid status of EaSI Guarantee (compared to EPMF)

4 EaSI Guarantee What features are new? European Code of Good Conduct for Microcredit Provision Potentially penalty fee after grace period Indicatively EUR 10,000 for a notional cap amount of EUR 1 m As comparison, maximum commitment fee would be around 30,000 for a notional cap amount of EUR 1 m Mentoring services Directly or indirectly offer basic forms of mentoring Impact reporting (replaces social reporting) Ex-ante (individual data also for enterprises, additional fields) Ex-post (additional fields and follow-up in 2016, 2018, 2020 and 2023)

5 EaSI Guarantee Open Call Published on EIF s website Unless terminated earlier, open until September 2023 Description of selection process will be outlined in the Call documentation Assessment of applications (English language) on a first-come, first-assessed basis EIF will perform desk due diligence and on-site due diligence Pre-selected On the Reserve list Not pre-selected

6 EaSI Guarantee Quality score criteria Financial standing Operational capability (e.g. assess and manage risks) Ability to provide data on track-record Origination capability (can agreed portfolio volume be reached?) Ability to comply with the Code once signed up (e.g. based upon self-assessment) Ability to provide or sub-contract mentoring services Ability to enhance access to finance

7 EaSI Guarantee Impact score criteria Outreach to at-risk groups (unemployed, minority groups, etc.) Expected enhanced access to finance (new financing volumes, improved loan terms, etc.) Expected impact on the promotion of equality between women and men Expected impact on the promotion of a high level of quality and sustainable employment, fight against unemployment and against poverty, social exclusion and discrimination

8 EaSI Guarantee Application requirements? Description of Financial Intermediary General background information State aid compliance Loan products Area of operations Distribution channels Mentoring Financial standing Annual reports (last 3 years) Asset-Liability structure Reliance on grants Operating principles Credit policy Monitoring and recovery procedures Risk management

9 EaSI Guarantee Application requirements..? Loan volumes Outstanding loan book (# and volume) Annual trend in loan volumes (# and volume) Loan pricing Pricing policy Pricing elements (cost of funding, operational costs, risk margin, etc.) IT system architecture Ability to comply with reporting requirements

10 EaSI Guarantee Application requirements..? Credit Risk Track-record (3 5 years) Cumulative defaults Cumulative net losses Vintage analysis (or dynamic data) Estimated credit risk profile for EaSI portfolio (with a margin) Proposed product to be covered by EaSI guarantee New or existing Additionality (loan pricing, collateral, maturities, target borrowers) Volumes (and #) over assumed Availability Period Strategy for marketing and promotion of EU support

11 EaSI Guarantee Next steps Mandate signature End May? Launch of Call for Expression of Interest End May? Pre-selections July onwards Transaction approvals July onwards Chief Executive (< EUR 3 m Cap) or Board approval Signatures September onwards +EUR 20 m of signatures in 2015

12 Thank you! Per-Erik Eriksson Head of Microfinance Investments European Investment Fund, EIF 37B, avenue J.F. Kennedy L-2968 Luxembourg Tel.: www: